Saint Louis University Hospital

SSM Health: Baldrige Pioneer Now Value-Based Care Model?


SSM Health
In 1872 St. Louis, all that would later become SSM Health could fit in the basket Mother Mary Odilia Berger, SSM., carried from house to house – bread for the poor, medical supplies for the sick and clean linens for her patients.  As she walked “with a very purposeful step,” people she met on the street would slip a donation in her basket.

Nearly 145 years later, woven in today’s SSM Health “basket” are 30,000 people – including 1,300 employed physicians – working in four states at 19 hospitals and more than 60 outpatient clinics.  In addition, the system operates an insurance company, two nursing homes, comprehensive home care and hospice services, a telehealth company and two Accountable Care Organizations (ACO).

Among the hospitals is the system’s first academic medical center, Saint Louis University Hospital, which it acquired earlier this year from Tenet, and a children’s hospital.  Most of the outpatient clinics and many of the physician employees arrived with the 2013 acquisition of Wisconsin’s Dean Health System.  Dean also brought a health system rarity, ownership of a growing pharmacy benefit manager along with a string of retail pharmacies and eye care centers.

Process, Purpose, Patient

The base of today’s SSM Health “basket,” with its focus on process, purpose (mission) and patient, took shape in the hands of another purposeful leader, Sister Mary Jean Ryan, FSM.  It took a dozen years, beginning four years into her leadership of a newly centralized system:

  • Process (1990): She and the system’s leaders committed to continuous quality improvement.  They aimed to “create a culture in which every employee at every facility and at every level of the organization would constantly seek to improve processes – every single day.”
  •  Purpose (Mission) (1998): Three thousand system employees, at all levels, in all locations, condensed a wide variety of mission statements into one succinct declaration:   “Through our exceptional health care services, we reveal the healing presence of God.”  The system had discovered it needed develop a more compelling mission after practicing with the Malcolm Baldrige National Quality Award criteria.
  •  Patient (2002): The system attributes its 2002 Baldrige Award to a focus on its core customers, patients, and “connecting the dots” from Baldrige criteria through core processes and results.  SSM Health had begun submitting applications as soon as health care organizations became eligible for the award, in 1999, and became the first in the category to win.

In July of this year, Quality Management Journal published a study comparing 34 Baldrige winners, including SSM Health, with their 153 geographically closest competitors.  It found that the “award recipients provided care equal to or better than competitors while at the same time providing a better patient experience.”

The “patient, purpose, process” culture SSM Health created as it pursued the award, and nurtured thereafter, has proven to be a dependable guide for the system amidst health care’s transformation from volume- to value-based care.

To Join or Not to Join

Earlier this year, SSM Health committed to put 75 percent of its business into value-based arrangements that focus on providing higher quality at lower costs by 2020.  It did so as one of 24 provider organizations participating in the Health Care Transformation Task Force, which also includes payers and employers among its members.  Dr. Gauroy Dayal, health care delivery vice president for SSM Health noted that the system “began working on transforming itself five years ago….when it began assuming risk and responsibility for improving the quality of care while lowering costs.”

On the other hand, because of its unique culture, SSM Health knows what not to join.  Several years ago, the system chose not to participate in the Medicare Shared Savings Program (MSSP) by creating a Medicare Accountable Care Organization (ACO).  It had concluded that the assignment of beneficiaries based on claims history, not choice, was inconsistent with SSM Health’s transparent, patient centered care model.

Instead, SSM Health embarked on a path to “True North,” as it explained in a Mayo Clinic Proceedings article, “The SSM Health Care Approach to Achieving ‘True North’:  Improving Health Care Quality While Reducing Costs.”   True form, it created a process based on a functional definition of accountable care.  The system then chartered five teams to design “an organization capable of assuming and managing global clinical and financial responsibility for the care of a defined population.”

The Volume to Value Process

Flashes of process appear continually from SSM Health as it makes the change from volume to value.  For example, the system has:

  • Created a methodology to eliminate unjustified variation in their medication formulary using available data from purchase history, quality management systems and electronic health records.
  • Established a “single source of terminology truth” that effectively manages and maps data to industry standards, ensuring accuracy across the enterprise in advance of ICD-10.
  • Developed more efficient processes for utilizing hospitalists, decreasing readmissions.
  •  Deployed a digital app, which learns and adapts to self-reporting patients, reducing 30-day hospital readmissions by 57%.

Even the legal department is doing its part, earning recognition as a 2015 Association of Corporate Counsel Value Champion.

Process at SSM Health may be very rewarding, but it is certainly not easy.  Take clinical device technology.  Teams now have data at their fingertips enabling business decisions based on fact, data such as mean-time-between-failure, according to Heidi Horn.  However, “It took a vision and years of work and tenacity by all 100+ team members of Clinical Engineering Service,” she added.

SSM Health’s commitment to process likely played a decisive role in its merger with Dean.  Although both organizations had worked together for decades, neither assumed a successful integration would necessarily follow.  In fact, SSM paid “an excessive amount of attention” to culture, according to Dr. Dayal, who originally had been with Dean.   An “organizational heath index” of several hundred parameters characterized the two cultures, identifying the presence or absence of overlaps.

SSM Health More Like Dean

Trustee Magazine reports that, as a result, SSM Health has become more like Dean since the merger, putting doctors on the board and appointing Dayal and another physician to lead two of its three divisions.  Objective accomplished, because SSM Health acquired Dean not for its financial assets, but for its talent, knowledge and capabilities, especially around health plan and physician practice management.  As Dayal explained, the 90-year-old, fiercely independent, physician-run Dean has given SSM the capabilities needed to transform into an integrated value based organization.

Operating a health plan since the 1980s and a population health model since 2009, Dean can accept performance risk for almost 70% of its business.  An innovative medical value program brought clinicians, staff and data analysts together to identify opportunities to improve clinical processes and care management.  The program used claims data from Dean’s insurance arm and electronic health records from area hospitals owned by SSM Health – before the merger.

Now, after the merger, the fully integrated SSM Health Care of Wisconsin now offers some of the lowest public exchange health insurance costs in the state for Janesville-Beloit consumers in Rock County south of Madison, on the Illinois border.  It did so through its St. Mary’s Janesville Hospital, Dean Health System and Dean Health Plan.

In fact, when Rock County consumers select health coverage, they choose between health providers, not health insurers.  Competing in the same area is a similar fully integrated health system, also with an insurance component, Mercy Health System.  Citizen Action of Wisconsin, which compiled the rate comparisons, gave both Dean and Mercy four-star ratings.  Only Gunderson Health Plan received five stars.

“Vertical integration has a lot to do with the lower rates,” explained Dean’s Jamie Logsdon.  “When you’ve got a network, such as Dean and St Mary’s Janesville in that market, they are all working together to provide more efficient care.”

Twenty-five years in the weaving, the “basket” that is SSM Health could very well be a model for value-based health care.

Boeing, Going, Gone: The End of Group Health Insurance

Boeing Headquarters

Come the fall, when benefit enrollment is in full swing, Boeing employees in St. Louis and South Carolina will have a new option – one of their local health systems, in addition to current coverage alternatives from Blue Cross and Blue Shield (BCBS) plans.

Boeing announced last week that it has directly contracted with Mercy Health Alliance, an accountable care organization (ACO) in the St. Louis bi-state region, and the Roper St. Francis Health Alliance ACO in South Carolina’s coastal low country.  Express Scripts is managing the pharmacy benefit and the Health Care Service Corporation of BCBS Illinois will help with administration and paper work.

Greater Savings, Improved Health, Better Experience

By working directly with the ACOs, Boeing hopes to save money for itself and employees, improving employee health and enhancing service for a more positive employee experience.  Boeing South Carolina executive Beverly Wyse told WSCC-TV the company is applying the same logic to healthcare as it does in building Dreamliners, with a commitment to more quality, reliability and lower costs.

Boeing estimates employees will save $350 to $1,000 per person per year on monthly payments, deductibles, copays and prescription costs.  Mercy executive Donn Sorenson told the St. Louis Business Journal Mercy could cut per family health care costs by more than half to $6,000 from the large-employer average of $15,849.  He plans to do it with greater attention to preventative and maintenance care.

In negotiating Preferred Partner ACO contracts, Boeing puts a high priority on access and convenience.  Primary care appointments are available for acute conditions same day and within 72 hours for any condition.  The wait for a specialist appointment can be no longer than 10 days.  In addition, each Preferred Partner provides extended hours, a dedicated phone line with care navigators, a member website and phone apps.

Competition in Seattle

Additional Preferred Partner arrangements are in the works, understandably because Boeing’s formula appears to be working.   A year ago, Boeing contracted with two ACOs in the Seattle area – Providence Swedish Health Alliance and the UW Medicine Accountable Care Network.  Of the 27,000 eligible employees and 3,000 retirees, about 18,000 signed up for one of the ACOs in roughly equal numbers.

In Seattle Boeing has pitted two prominent health systems against each other, creating a retail, consumer market within its large employee population, much like a private exchange.  Through their ACOs, both systems have assumed upside and downside risk, absorbing an insurer’s traditional role.

Instead, BCBS Illinois collects and provides data, in addition to performing administrative services as in St. Louis and South Carolina.   Boeing’s relationship with BCBS Illinois could be a plus, if the manufacturer decides to implement a private exchange.  BCBS Illinois has its own, Blue Dimensions, private exchange platform, which offers “many of the same features of online shopping.”

Boeing’s Health Care Endgame

In fact, the Seattle competition may foreshadow Boeing’s endgame, according to Tory Wolff of Recon Strategy.  Boeing “is setting up its market to transition to a provider-consumer type market.  We do not expect it to be too long before Boeing starts transitioning its employees to defined contribution.”  The impact would be substantial.  The company spends $2.5 billion on health care for 480,000 employees, dependents and retirees in 48 states.

Assuming Wolff is right, look for Virginia Mason to become a third option for Boeing’s Seattle employees.  In St. Louis, SSM and its newly acquired Saint Louis University Hospital could become a second option.  In time, BJC Healthcare/Washington University Physicians will conclude their shared brand – without an insurer intermediary — can attract more Boeing patients.   In South Carolina and other major Boeing locations, expect the same.

Private Exchanges – Small but Growing Rapidly

While Boeing approaches a private exchange, where employees get a broad range of coverage options and a defined company contribution, other large employers have already made the plunge. These include Walgreen Co., CVS Health Corp. and IBM, at least for retiree benefits.

Admittedly, private exchange utilization is still extremely small.  There are six million participants this year, up from three million in 2014.  However, by 2018, 40 million people likely will choose coverage on a private exchange, according to an Accenture study.

Aon Hewitt attributes the projected surge to a number of factors, including lower cost.  The average annual cost increase to employers completing a second year renewal 2.6%.  Large employers with similar benefit structures saw increases of 6.5% to 8% this year.

However, the most significant driver is a 40% excise tax on “Cadillac” health benefit plans scheduled for 2018 implementation under the Accountable Care Act.  Imposed on family and individual plans respectively costing $27,500 and $10,200, the tax could impact as many as 48% of employers in its first year, according to the benefits consulting firm Towers.

According to Accenture, private exchanges are a “compelling alternative” for employers who want to accomplish two goals simultaneously – control cost and administrative burdens, while still providing health coverage.  They are very aware that 76 percent of consumers see health insurance as the primary or an important factor for continuing to work at their current employer.  In fact, employer involvement in facilitating health benefits matters as much if not more than the employer’s financial contribution.

Sam’s Club Now, Amazon Soon?

Typical operators of private exchanges include health insurance companies and benefit consulting firms.  However, small employers may rely on an unlikely source to provide their employees with coverage options, Sam’s Club, which has collaborated with Aetna to offer the Aetna Marketplace for Sam’s Club.  Employers can offer a defined contribution plan or make a flat, pre-tax contribution an employee can apply to his or her plan choice.  (Recently proposed IRS rules could negatively affect the latter option.)

Can Amazon be far behind?  Perhaps not.  Both Wal-Mart and Amazon are engaged in a fierce battle for consumer loyalty.   There is no public evidence suggesting an Amazon move toward offering a private exchange.  However, Amazon Web Services has been touting its deep association with Oscar Health, a technology-driven, health insurance start-up, which could be serving as a learning platform for Amazon.

What is surely not far behind is the end of group health insurance, supplanted by a rapidly growing retail market for health coverage.  As blogger Joe Markland has observed, “a single 10,000 person employer will become a firm with 10,000 retail buyers.”    In addition to the 40 million in private exchanges by 2018, Accenture predicts there will be 31 million participants in public exchanges, up from 15 this year, for an overall 71 million consumers.

Retail Market Driving Insurance Mergers

This burgeoning retail market is the primary driving force behind the mergers of Anthem and Cigna, and Aetna and Humana, respectively.  Yes, greater size will provide negotiating advantage, but within a model that is quickly becoming obsolete.  In fact, insurance industry critic Wendell Potter observed last year, “If the Boeing strategy flies, health insurers as middlemen will be history.”

Agreeing, Leavitt Partners notes that employers want benefit options that will drive a world-class, healthy, productive workforce.”  However, it concludes, “the current composition of intermediaries cannot meet these demands on yesterday’s technology and workflows.”

Instead, health insurers are racing to avoid commoditization.  They have to reposition to add value differently in the new retail paradigm.   Instead of pounding out reimbursement deals with providers, they will need to collaborate, creating differentiated coverage alternatives for retail marketplaces.

More important than added scale, success for these insurer mergers will depend on the integration and expansion of initiatives such as:

Ultimately, successful health insurers will be collaborators instead of intermediaries, creating value with, not at the expense of, providers in a retail marketplace.

For more on this topic, see Employers Chasing Health Care Rainbows and Branded Narrow Networks:  Gold Value at Bronze Prices.